Cryptocurrency Apps Open Financial Doors for Working Poor in Asia

The popular image of a cryptocurrency user is usually that of a young middle-class, tech-savvy person opting out of the traditional working world to try and make a fortune at home on their computer or paying for an expensive coffee with an obscure app on a complicated smartphone.

But in the developing countries of South East Asia where people have limited access to banking services, cryptocurrency is becoming a real solution to financial problems that have plagued the working classes. Case in point, Cambodian motorcycle taxi driver Sachaknisay Sov recently discovered a better way to pay bills when he took a loan in digital tokens for about $500 through an application that allows him to convert the tokens to cash at local pawn shops.

Sachaknisay who until recently borrowed money from friends and family to make ends meet at interest rates of as much as 18%, compared to the 5% he pays through the app, said “[Digital token-based loans are] absolutely much better than the traditional ones, It has a lower interest rate.” As reported by the South China Morning Post. 

One such digital loan application based in Phnom Penh is DApact. The application is able to trace every digital token it loans through a unique code which records its entry and exit points, requiring no manual check which the company says allows them to manage the business at a third of the cost of traditional financial institutes. That saving is then passed on to borrowers which allow even poor villagers to take out loans in order to start or grow a small business.

KPMG the global auditing and consulting agency estimates that as many as seven out of ten people in South East Asia did not have a bank account in 2016. What they did have and spend more time on than their counterparts in the developed world are smartphones.  For a company like Manila based Coins that equals a huge business opportunity.

2.2 million Filipinos work overseas and most have been using traditional remittance services which charge high rates for cross-border payments to send money home. Coins, for example, has enabled Filipino workers in the UAE to transfer local currency into Bitcoin and send it home for less than half of what Western Union, the largest remittance service in the world, charges.

Another Fintech startup in Cambodia, Micromoney, has already been able to extend it’s loan services to 110,000 customers across the region in Myanmar, Indonesia, Sri Lanka and Thailand. As in most countries in the world, the utility of cryptocurrencies is still very limited on a vendor to customer basis in Asia but as Cambodian crypto entrepreneur Rithy Thul puts it,

“Digital currency is not perfect, but it is the most perfect money poor villagers have ever had.”

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